The two-wheeler industry was disrupted first by the implementation of GST and the move from BS-III to BS-IV emission standards.

Recently, the Insurance Regulatory and Development Authority of India made five-year third-party insurance cover mandatory for all new two-wheelers.

Honda Motor is bullish on the long-term opportunities for two-wheelers in India, but is cautious at present on decision-making as frequent policy changes have caused some uncertainty, a senior executive at Honda Motorcycle & Scooter in India said.

“India is a very important market but frequent changes in policy impacts decision making,” said YS Guleria, senior vice president of sales and marketing at the local two-wheeler maker.

The two-wheeler industry was disrupted first by the implementation of GST and the move from BS-III to BS-IV emission standards. Recently, the Insurance Regulatory and Development Authority of India made five-year third-party insurance cover mandatory for all new two-wheelers. The premium for all five years must be paid at the time of the vehicle purchase. A five-year personal accident cover of Rs 15 lakh was also made compulsory but, after a court order, the regulator reduced the tenure to one year.

Guleria said the change in insurance policy led to a 13% increase in the acquisition cost of two-wheelers and caused a 15-20% drop in retail sales. The impact was particularly visible during the festive period around Diwali when sales usually peak. “We had pushed inventory ahead of the festive season but due to low retail, our inventory went up to two months which we have corrected to about 40 days now,” he said on the sidelines of the Milan Motorcycle Show. With the rise in insurance premium, as much as 48% of the people who buy a motorcycle or scooter go for a loan, compared with 40% previously, Guleria said. Manufactures had dispatched more than 1.36 crore two-wheelers to dealerships since the beginning of April this year, an 11.14% increase from a year earlier. Figures for retail sales aren’t available.

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